Marta L. Perez was injured when the vehicle in which she was riding was struck by a vehicle driven by Gustavo Davalos Torres. The jury returned a verdict in Perez’s favor. Thereafter, Torres filed a memorandum of costs claiming that he had made a valid offer pursuant to Code of Civil Procedure section 998 (hereafter sectiоn 998)
FACTUAL AND PROCEDURAL SUMMARY
This is an appeal from an order made after judgment was entered. Thus, the underlying facts, for the most part, are not relevant to the issue before us.
Relevant here is that Torres made a section 998 offer to settle thе case against Perez for $100,000.49. Perez did not accept the offer. The jury returned a verdict in favor of Perez for $77,986 in compensatory damages and for $1,400 in punitive damages. Thereafter, Torres filed his memorandum of costs pursuant to section 998. Perez moved to tax those costs and the trial court granted the motion, concluding the section 998 offer was invalid.
DISCUSSION
The only issue is whether the section 998 offer made by Torres was valid. Resolution of this issue requires consideration of the right to recover costs in a civil action and the effect of section 998.
Statutory Right to Recover Costs
The right to recover costs is derived solely from statutes. In the absence of statutory authority, each party must pay his or her own costs. (Davis v. KGO-T.V, Inc. (1998)
Section 998
“Section 998 modifies the gеneral rule of section 1032 . . . .” (Scott Co., supra,
In the circumstances of this case, where the рlaintiff refuses the defendant’s offer and then fails to obtain a more favorable judgment, the plaintiff is precluded from recovering his or her costs incurred after the offer was made, and the defendant is entitled to recover his or her costs incurred after the offer was made. (§ 998, subd. (c)(1).) In addition, the trial court has discretion to order the plaintiff to pay the costs the defendant incurred for the services of expert witnesses. (Ibid.) These provisions were the basis on which Torres relied when he filed his memorandum of costs.
Torres concedes, however, that his offer did not comply with all the requirements of seсtion 998, which requires the offer to include “a statement of the offer, containing the terms and conditions of the judgment or award, and a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.” (Id., subd. (b), italics added.) (This provision is referred to throughout this opinion as the acceptance provision.) Torres failed to include the acceptance provision in his offer.
Torres contends, however, that the omission was harmless and should not have been interpreted to invalidate the offer. Torres argues that to conclude otherwise would elevate form over substance, thereby defeating the legislative intent behind section 998. “[T]he Legislature adopted [section 998] to
Puerta v. Torres
Torres admits that his position is contrary to the holding in Puerta but asserts that Puerta is distinguishable. Puerta represented himself in a suit against the defendаnt for injuries sustained in an automobile accident. The defendant prevailed at trial and the trial court awarded the defendant her costs pursuant to section 998. Puerta argued the trial court erred in awarding section 998 costs to the defendant because the offer did not contain an acceptance provision and thus was invalid.
The appellate court acknowledged the line of cases that found a section 998 offer valid when the terms were clear and understandable, even if the offer did not follow the statute’s language precisely. (See, e.g., Berg v. Darden (2004)
Section 998 does not state that an acceptance provision is required only if the opposing party is not represented by an attorney. The plain language of the statute requires all offers to contain an acceptance provision.
Nor did the appellate court in Puerta rely on the plaintiff’s unrepresented status in reaching its conclusion. Instead, the appellate court reached its conclusion because appellate courts cannot ignore the plain meaning of a statute to achieve a more desirable result.
Poster v. Southern Cal. Rapid Transit Dist.
The main case cited by Torres does not persuade us otherwise. In Poster the issue was whether a counteroffer automatically revoked a section 998 offer, as is the general rule in contract cases. Section 998 was silent on the issue of whethеr a counteroffer would result in the original offer automatically being revoked. (Poster, supra, 52 Cal.3d at pp. 270-271.) The Supreme Court held that general contract principles could be used to interpret section 998 where “ ‘such principles neither conflict with the statute nor defeat its purpose’ ” (Poster, at p. 271), but application of the contract principle that a counteroffer revokes an offer in the context of section 998 would be “likely to discourage settlements and to confuse the determination regarding imposition of costs” (Poster, at pp. 271-272). Therefore, the Supreme Court concluded that thе “legislative purpose of section 998 is better served by the bright line rule” that a counteroffer does not revoke a section 998 offer. (Poster, at p. 272.)
Torres acknowledges that section 998 requires an offer to include an acceptance provision but points out the statute is silent about the remedy when аn acceptance provision is omitted. This silence, according to Torres, renders the statute vague, thereby permitting us to rely on legislative intent to
In other words, Torres asks us to “interpret” section 998 to require an acceptance provision only when a party is unrepresented, thus rendering the acceptance provision requirement a nullity in the vast majority of cases in which a section 998 оffer is made. Poster does not support, or suggest, that we may ignore the plain meaning of a statute in the guise of “interpreting” a statute. Instead, Poster dealt with an issue that was not addressed in the statute.
Nor does logic support Torres’s argument. Section 998, subdivision (b) not only requires the offer to include an acceptance provision, but it also requires all offers and acceptances to be in writing. If we were to conclude that omission of the statutorily required acceptance provision is harmless, logic would dictate that the failure to comply with other statutory requirements would be subject to a prejudice determination using a harmless error anаlysis. Using Torres’s logic, when the parties are represented, the failure to make a written offer would be found harmless, as would the failure to accept the offer in writing, or virtually any other omission of a statutory requirement. The result of Torres’s logic would render all of the requirements of section 998 optiоnal if the parties are represented by counsel because any failure to comply with the statute would be deemed harmless.
The exception urged by Torres would thereby swallow the rule. Uncertainty and confusion will become the rule. Attorneys will wonder if the omission of a statutorily required provision rеnders the offer or acceptance invalid or is merely a harmless error. Or an attorney may attempt to take advantage of the cost-shifting provisions by arguing that any omission in the offer was harmless, as Torres does in this case.
Instead, as in Poster, we conclude the rule suggested by Torres would confuse the determination of costs, and a bright-line rule invalidating an offer when it omits an acceptance provision, or any other statutorily required provision, is the better rule.
Applicability of Section 475
Finally, Torres argues the trial court’s order was erroneous because Perez never indicated she would have accepted the offer if it were valid. This argument also was rejected in Puerta because the offer was “invalid under thе plain language of the statute, regardless of whether Puerta ever intended to accept the offer . . . .” (Puerta, supra,
Torres cites section 475 as authority for this argument. That section requires the trial court to disregard any error in the pleadings if the substantial rights of the parties are not affected and prohibits reversal of a judgment or decree by reason of an error, unless it appears a different result would have been achieved in the absence of the error.
Torres was attempting to recover $44,953.07 in costs from Perez. Perez did not have to reimburse these costs because of the invalid section 998 offer. If we concluded that the cost-shifting provisions of section 998 should be enforced, despite the invalidity of the offer, Perez would incur a $44,953.07 bill she is not otherwisе obligated to pay. Clearly, this is a different result and affects Perez’s substantial rights. Section 475 is not applicable in these circumstances.
The order granting Perez’s motion to tax Torres’s cost bill is affirmed. Perez is awarded her costs on appeal.
Wiseman, Acting P. J., and Kane, J., concurred.
All further statutory references are to the Code оf Civil Procedure.
The underlying facts are discussed in more detail in the appeal from the judgment in our partially published opinion filed May 24, 2012 (Landeros v. Torres (2012)
Puerta v. Torres (2011)
Since we rely on the plain language of the statute, we deny Perez’s motion for judicial notice of the legislative history of the 2005 amendment to section 998, subdivision (b), which addеd the acceptance clause and made other changes to the subdivision. (Stats. 2005, ch. 706, § 13, p. 5651.)
Poster v. Southern Cal. Rapid Transit Dist. (1990)
As in Puerta, we concede that our conclusion will not eliminate all potential issues regarding acceptance provisions. Section 998 does not require a particular form of acceptance provision and there “is room for interpretation as to how an appropriate statement regarding acceptance might be phrased.” (Puerta, supra,
Section 475 states in full: “The court must, in every stage of an action, disregard any error, improper ruling, instruction, or defect, in the pleadings or proceedings which, in the opinion of said court, does not affect the substantial rights of the parties. No judgment, decision, or decree shall be reversed or affected by reason of any error, ruling, instruction, or defect, unless it shall appear from the record that such error, ruling, instruction, or defect was prejudicial, and also that by reason of such error, ruling, instruction, or defect, the said party complaining or appealing sustained and suffered substantial injury, and that a different result would have been probable if such error, ruling, instruction, or defect had not occurred or existed. There shall be no presumption that error is prejudicial, or that injury was done if error is shown.”